A construction company is considering to acquire new equipment. Table 1 is the information of two alternatives for this new equipment. Complete the following questions according to the PW analysis The after-tax market minimum attractive acquire

(1) Which alternative should the company acquire?

(2) If the inflation rate is 2% per year and the base year is year 0, which company should you choose?

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第2頁 Table 1 Capital investment Annual benefit (increases per year as the inflation rate if inflation is considered) Depreciation method Depreciation life Salvage Value Useful life Market value (increases per year as the inflation rate if inflation is considered) A 9000 3000 Straight Line 3 years 2000 5 years 2000 B 30000 9000 200% Declining Balance 3 years 0 5 years 2000 第2頁 Table 1 Capital investment Annual benefit (increases per year as the inflation rate if inflation is considered) Depreciation method Depreciation life Salvage Value Useful life Market value (increases per year as the inflation rate if inflation is considered) A 9000 3000 Straight Line 3 years 2000 5 years 2000 B 30000 9000 200% Declining Balance 3 years 0 5 years 2000

Answer rating: 100% (QA)

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